Evening Report (VIP) -- March 11, 2014

Consultant raises Argentina soybean crop, lowers Paraguay crop... Pro Farmer South American Crop Consultant Dr. Michael Cordonnier increased his estimate of the Argentine soybean crop by 500,000 MT from last week to 54 MMT. He says relatively favorable weather in February aided the late-planted double-crop soybeans. He continues to have a neutral to higher bias toward the crop.

Dr. Cordonnier lowered his estimate of the Paraguay soybean crop by 1 MMT to 8 MMT due to hot and dry conditions during the critical pod-filling stage. Meanwhile, he left his Brazilian soybean estimate unchanged at 87 MMT after four consecutive weeks of declines. These estimates compare to USDA's current pegs of 54 MMT for Argentina, 88.5 MMT for Brazil and 8.1 MMT for Paraguay.

Consultant leaves South American corn estimates unchanged... Dr. Cordonnier left his Argentine corn crop estimate unchanged at 23 MMT, but says improved conditions in northern areas lead him to have a positive outlook on the crop, which could lead to the estimate being raised if weather remains favorable.

Dr. Cordonnier also left his Brazilian corn estimate unchanged at 68.5 MMT, but says there is a "strong possibility the estimate may head lower in the next month or two" due to the possibility not all the safrinha corn acreage will be planted, potentially low yields from very late-planted corn and because of an average or earlier-than-normal end to the rainy season. USDA currently pegs the Brazilian corn crop at 70 MMT and the Argentine corn crop at 24 MMT.

Aussie scientists see chances of El Nino increasing... The Australian Bureau of Meteorology says ENSO-neutral conditions continued the past two weeks, but international climate models indicate the tropical Pacific Ocean is likely to warm in the coming months, with most models showing temps approaching or exceeding El Nino thresholds by the Southern Hemisphere winter (summer in the Northern Hemisphere).

The bureau says all the climate models it surveys reflect ENSO-neutral continuing through the Southern Hemisphere fall (spring in the Northern Hemisphere), but all models suggest warming of the tropical Pacific Ocean will occur, with some (but not all) models approaching or exceeding El Nino thresholds by July. La Nina appears unlikely.

Meanwhile, meteorologist Gail Martell of MartellCropProjections.com tells us that while strong warming has occurred in the western equatorial Pacific, the eastern equatorial ocean is still cooler than normal. "When you look at the daily sea surface temperature anomalies in the Nino 3.4 region, the area where ENSO conditions are most closely monitored, ocean temperatures have maintained below normal. There have been ups and downs, but (it has remained) below-average since December 1."

Hurt: Market anticipates 7% to 10% slaughter reduction... Purdue Extension Economist Chris Hurt says based on current futures prices, he believes traders expect hog slaughter to be reduced by 7% to 10% due to porcine epidemic diarrhea virus (PEDV). He says it remains to be seen whether slaughter supplies will fall enough to warrant the $10 to $14-per-cwt. surge in spring and summer futures over the past two weeks.

"So far this year the number of animals coming to market has been very close to the numbers indicated in the U.S. Department of Agriculture's December Hogs and Pigs report," he says. "When adjusted for the number of slaughter days compared to last year, the slaughter count so far is down 0.5%. However, market weights have been higher by about 2.5%, thus causing total pork production to be up by about 2%." Click here for more from Hurt.

Meat exports off to strong start in 2014... According to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF), beef and pork exports were up in terms of volume and value to start 2014 compared to year-ago levels. But USMEF acknowledges there will be challenges this year due historically high prices and access to some markets.

In January, beef exports of 97,824 MT were up 13% in terms of volume and 16% in terms of value compared to year-ago, bolstered by double-digit growth in Mexico, Japan and Hong Kong. Pork exports of 191,561 MT were up 3% in terms of volume and 2% in terms of value compared to year-ago, driven by growth in Mexico. Click here for more.

Winter wheat conditions improve slightly across Southern Plains... According to state crop reports, the condition of the winter wheat crop across the Southern Plains improved from last week, especially in Kansas and Texas. While less of the crop in Oklahoma is rated "good" to "excellent" compared to last week, less is also rated "poor" to "very poor," as the "fair" category increased by nine percentage points. Click here for more state-by-state details.

Crop condition

Very Poor

Poor

Fair

Good

Excellent

Kansas -
03/09/14

5

13

45

35

2

03/02/14

4

18

44

32

2

Okla. -
03/09/14

8

23

47

20

2

03/02/14

6

25

38

28

3

Texas -
03/09/14

11

20

41

24

4

03/02/14

16

30

39

14

1

Martell says there is another chance of at least 0.25 inch and up to 0.60 inch of rain for these three key HRW states this week. "Moisture is desperately needed to resolve drought in the hard red winter wheat belt," she says, noting that winter precip has been about half of normal.

EU biodiesel duties weigh on Argentine exports... Argentina's Biofuels Chamber (Caribo) says the nation's biodiesel exports will likely plummet by 39% this year versus 2013 as a result of tariffs the European Union imposed on the nation. Last year, Argentina exported 1.15 MMT of biodiesel, with Europe as the main recipient. But in November, the EU set tariffs at an average of 24.6% for Argentine biodiesel imports, which has limited export volume. Argentina has challenged the duties at the World Trade Organization (WTO).